Why We’ve Given Back 50% of Our Profits to Our Employees

When it comes to business, growth is important. But so are a whole bunch of other things. Like your employees, for example.

Being a profitable company has never really been popular in the collective imagination. In the 90s, when I started my first business, corporate profit was directly associated with the exploitation of workers.

A profitable business was a business that made money off the backs of its employees to feed the shareholders. All the businesses were kind of lumped together. Bosses and shareholders on one side, employees on the other. Today, the image of the entrepreneur has changed radically.

Yet starting a profitable business is still not popular. The hyper-growth model has become the standard benchmark. What matters is not to be profitable, but to grow as quickly as possible; to raise as much money as possible. Profit is not a priority, that will be the problem of future buyers or small holders, assuming the company goes public. And it’s ultimately a very convenient model because of that fact. Following this model, you don’t make money off the backs of employees, because you don’t make money period. Quite the contrary.

Everyone benefits by offering stock options, or free shares. The influx of cash makes life comfortable (at least in appearance). Foosball and free food is so “2000s”; now it’s unlimited vacations, multiple perks, and a patronizing tone toward traditional businesses that “would do well to get moving.” Provided, of course, that the sacrosanct growth is part of the game.

Because when the market turns, like it did in 2001, the story will be very different for those who didn’t have time to pass the hot potato on to others. In fact, they’ll get burned.

A Unique Way of Thinking

Let’s face it: entrepreneurs who don’t necessarily dream of having unicorn status are pretty tired of seeing a system with which they do not identify. This popular model does have some virtues, but it’s simply not what all entrepreneurs want. Hyper-growth financed at a loss can be destructive.

It’s often toxic for the ecosystem because it knowingly promotes unhealthy habits: dumping and ultra-aggressive commercial practices, shameless debauchery of resources, large-scale head-hunting, etc. Its hidden goal is to wipe out or disrupt the competition by smothering it under the weight of all the cash raised.

Reid Hoffman never hid this fact in “Blitzscaling,” the bible on this subject. It’s right in the open.